goldtpa Posted March 1, 2004 Posted March 1, 2004 Client failed the ADP test. We calculated how much money needs to be returned to the HCEs. Unfortunately one of the HCEs left the company in 2003 and received a full distribution in February of 2004. He rolled the money to an IRA. We must return money to him to pass the ADP test. The financial institution holding the 401(k) money has said that they must issue a 1099 showing the rollover to his IRA. They have suggested that I contact the receiving institution and get them to disburse the the appropriate amount. What is the appropriate course of action? Thanks in advance.
jquazza Posted March 1, 2004 Posted March 1, 2004 The money has been distributed from your plan, so you are clear with that respect. All you need to do is send the participant a letter identifying the portion of his/her distribution as a corrective distribution not eligible for rollover and let himher deal with his/her financial institution. You will have to correct the 1099-R to reflect the proper code of course. /JPQ
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